So you’ve decided that you want to leave your current job and set up your own e-commerce empire. Perfect!
We know that the establishment of an e-commerce site without a business plan can be tempting. But please, do not do it.
So, what will you get with your business plan?
• Knowledge – More concrete sense of what you already know; and more importantly, what you do not know.
• Resources – The resources required to make your business successful (eg, money, partners, employees, etc.).
• Milestones – Milestones will help you set goals for your business right from the start.
• Feasibility – Probably the most important thing – once you have a written business plan, you will get a better sense of the feasibility of the project.
Your value proposition
Your value proposition section should be concise. Pretend you have one minute to explain your idea to a venture investor/potential customer and write up what you would present.
Writing a business model
There are several ways to sell products over the Internet and several business models that can be used. Try to determine the most appropriate business model for the type of product you intend to sell.
What are you selling?
• Physical goods: clothing, household products and so on.
• Digital products: e-books, software / computer applications and so on.
• Services: consulting services, cleaning and so on.
To whom are you selling?
• B2B (Business to Business): Sales to businesses – organizations, or corporations etc., rather than to individual customers.
• B2C (Business to Customer): Sales to individuals and business customers.
• Marketplace (Market): intermediary between businesses and individual customers (B2C or B2B) through a website
How do you market and distribute your products?
• Domestic production: manufacturing household products.
• Third Party: outsourcing manufacturing to a third party.
• Another company manufactures, packs and sends directly to the customer without any intervention on your part. You are in charge of customer relations only (receipt of order, customer service, etc.).
• Wholesale trade; wholesale purchase of goods or services from other companies and their re-sale of your platform.
An E-commerce website cannot succeed without knowing the market its trying to sell to. That is why this section is the most important one in the business plan. It will help you understand the industry among other things, the general mood in the industry, competition and potential clients.
Here are some of the most effective ways to investigate a particular market:
• Various reports of industrial activity
• Examination of competition and competitors
• Sites such as Google Analytics, Similar Web, Alexa, etc.
Sales and Marketing
So you figure you have a great business idea and received the green light after a market analysis. Great – but how are you going to generate traffic to your site and get customers to buy your products? Which financial resources can you afford to spend on the project?
To create a marketing plan, you have to have an in-depth knowledge of your customers. Once we know as much as possible about our customers, we are able to allocate resources within the marketing plan itself. Which marketing channels should we use to attract the attention of our customers? Several key marketing channels include:
1) Paid Marketing
• PPC (pay-per-click) – targeted advertising through Google / Facebook.
• Affiliate Marketing – advertising product by blogs / sites, so that each time the product is sold, the affiliate receives percent of the purchase.
2) Organic Marketing
• Social networks (Facebook, Instagram, Pinterest, etc.): Which social networks are you going to use to market your product?
• SEO (Search Engine Optimization): Search engine optimization to be listed first on search engines.
• Content Marketing: What is your strategy in this area? How to convince people to buy your product / your products once they come to the site?
Choosing the optimal mix of marketing is 100% dependent on your target audience, and as well as the type of products sold. For example, a SaaS (Software as a Service) product would require a completely different marketing strategy from a consumer product that is sold online.
How much you need to spend to get a customer?
To understand this, we must first consider the concept called “Customer Lifetime Value” or CLV. In short, this is a formula that helps to understand better what will be the future revenue from a certain client throughout the entire lifetime of the company. It Is important to remember that you do not have enough information about the purchasing patterns of customers, so it is advisable to be conservative about the CLV.